Does your amazon business sell around $10,000 per month?
If so, before we go any further, congratulations! Hitting five figures in monthly revenue isn’t easy.
But if you’re like other Amazon sellers who have reached this milestone, it may be hard to enjoy your success, because you probably feel like you’re hitting a plateau.
Maybe you run an arbitrage business, and now you never seem to have enough money (at the right time) when you have a critical buying opportunity. Or maybe you have a private label product, and gaps in your cash flow mean you can’t stock up on inventory for your busy season, so you miss out on sales.
Do you recognize what it is?
HERE’S A HINT: IT’S ONE PART MONEY, ONE PART TIME.
Breaking the 10k monthly barrier
The reason many Amazon sellers struggle to break the $10,000 per month plateau and go on to make $100,000 per month is payment speed.
As your business grows, so does the cost of having Amazon hold on to your hard-earned cash for two full weeks. The more money you have in your bank now, the more you can spend on opportunities that will make your business grow now. Not in two weeks.
14 days is an eternity in eCommerce. While you’re sitting around twiddling your thumbs (or more likely flipping through Facebook) waiting for Amazon to pay you, your competitors are aggressively grabbing opportunities that will be gone by the time you get your next deposit.
That’s why getting paid faster is one of the easiest things you can do to grow your Amazon business from $10K to $100K per month.
1. Optimize your inventory position
Getting paid faster lets you be more strategic and have greater control over your inventory.
In a perfect world, your new shipment of products would be ready to sell right when the last of your older inventory leaves the shelves. That way you don’t have any extra money tied up in unsold inventory and storage fees.
While it would be impossible to pull that off consistently in real life, it illustrates the point that matching your inventory to your sales to optimize throughput is a key for accelerated growth.
Limit your risk without limiting your upside
For example, if you’re going to launch a new product and you know you can get paid quickly, you can be conservative with your initial order. If sales perform well, you can restock before you sell out. And if they don’t, then you’ve limited your downside.
On the other hand, if you don’t get paid quickly, you have to make a choice. Either you invest heavily in the new product and risk that it doesn’t sell (leaving you with tons of toxic inventory). Or you limit your initial order and risk running out, which would mean missing orders and getting dropped in the Amazon search and buy box rankings.
You could try taking on debt to finance the gap in your cashflow. But why should you take the risk when technically you already earned that income — it just hasn’t been paid to you yet?
Capitalize on exclusive buying windows
Also, for businesses that rely on limited opportunities to acquire products, like wholesalers and arbitrage companies, getting paid faster gives you the ability to operate at a faster pace.
For example, Jon Rush of C7 Device Recycle buys used electronics (like smartphones) and then refurbishes them to sell on Amazon. He constantly ran into the following issue: While he was waiting to get paid, a new batch of used phones became available. But by the time he got his money, they were all gone and he missed the opportunity to grow his business.
Here’s how he put it:
“When buying used, you can’t decide ‘tomorrow, I’m going to buy $10,000 worth of phones,’ they’re available when they’re available, so you need to have capital.”
When he started getting paid faster with Payability, he was able to jump on new inventory when it became available, and now he’s placing orders two or three times per week. That helped him increase his turnover rate, which is the second way getting paid faster helps you increase your sales.
2. Increase your turnover rate
Here’s a way to instantly double your business — cut your payment time in half.
Let’s say that every time you invest $3,500 in inventory, you make $5,000 in revenue, and you get paid every 14 days. That’s about twice a month.
Assuming you sell through all your stock, that means you have two opportunities per month to get paid $5,000 and buy new product with $3,500 of that. That would put your revenue at $10K per month.
What happens if you cut the payment window in half though, so you get paid in 7 days instead?
Now you have four opportunities per month to get paid $5,000 and invest $3,500. Of course you’d have to be in a place where you have the demand to collect those orders (more on that later). But if you do, your business would immediately jump to making $20K per month.
Turning over his inventory faster is how Jon from C7 Device Recycle had his first six-figure month. He said,
“It’s much easier to manage a daily business with daily infusions of cash. C7 is a seven-days-per-week business and to sync up our financing with that has made us smarter and more efficient. Now I’m buying phones 2-3 times a week because we don’t have to wait two weeks for our Amazon income.”
Like we said before, the demand has to exist in order to sell the additional units you buy when you double your inventory turnover rate. But if you’re getting paid more often, and have more cash at your disposal, you can also take matters into your own hands
3. Generate greater demand
When you increase your inventory turnover rate and sales velocity, it can create a flywheel effect that automatically produces even more demand for your amazon storefront.
Two of the most important things for running a successful Amazon business are getting high placement in their search results and owning the buy box. According to BigCommerce, 90% of all orders come through the company who owns the buy box.
One of the key metrics for getting into the buy box is your order volume and reviews. If you start turning over your inventory faster, you’ll naturally generate a higher order volume and more reviews. This will push you higher up Amazon’s search results and buy box rankings, which again will drive more orders and reviews, and the positive feedback loop continues. (As long as you have the capacity to keep yourself in stock, which we’ll talk about next).
You can even help stoke the flames by starting to invest (or increasing your spend) on featured placements within Amazon or other paid advertising. Reinvesting in growth is how Dan Todd, CEO of Influence Mobile, has been able to grow his business with Payability.
“Weekly payments massively improved our cash position and allowed us to reinvest that cash into [customer] acquisition, which is our key driver of growth. The best part is that their accelerated weekly payments grow with us each week as our revenue skyrockets.”
– Dan Todd, CEO of Influence Mobile
If you’re able to collect your payments faster, you won’t have to worry about having your cash tied up in either inventory or waiting to get paid out, and can afford to test different promotional campaigns. You can strategically spend money to generate more sales, which will only drive the flywheel faster, without worrying so much about selling out.
4. Mitigate sellout risk
Nothing kills your progress like being out of stock. Just think about all the ways it negatively impacts your sales:
- Your revenues decline since you have none of that product to sell.
- Your ROI on your paid marketing goes down because you based your projections on your store being fully in stock and you’re missing out on conversions or increased cart sizes while you’re out of stock.
- Your margins and profits may also go down if you have to pay a premium to expedite shipping on a replacement order.
- You may even wind up paying to drive sales to your competitors! For example, let’s say you run an ad that brings a shopper to your site, but you’re out of the size, color, or other variation they want. Then they see it’s “available from other sellers” on Amazon and buy it there instead. You’ve just financed a sale for your competition.
If you’re sold out too often, Amazon will lose confidence in your store, drop you down the search results, and pull you from the buy box.
Think about it. Amazon has a vested interest in driving shoppers to the seller that has the best chances for generating an order. If you’re out of stock all the time, you don’t meet that criteria, and they won’t want to feature you.
That’s exactly what happened to Jeff Kaplan, CEO of Athlete Packs. He was regularly getting bumped from the buy box whenever he ran out of inventory, and he just couldn’t restock fast enough if he had to wait 14 days to get paid.
That’s where Payability came to the rescue. Not only did getting paid faster help him drop his out-of-stock percentage to nearly zero, but he also was able to negotiate better rates and service with his suppliers. Now his business is growing faster than ever, with healthy margins and no stress about in-stock rates.
Best of all, Jeff said getting set up with Payability was seamless. “On a scale of 1 to 10, 1 being the hardest and 10 being the easiest, I would say it was about a 12” he said.
5. Payability the best way for Amazon sellers to get paid in days instead of weeks
By now you see how getting paid faster is perhaps the simplest way to grow your business from $10k per month to $100k and beyond. And that’s what payability is here to help you do.
We are a financing company for Amazon sellers who are doing at least $10K per month in sales (and have at least 90 days of sales history). Our service is simple. We buy your Amazon invoice from you and advance you the money you’re owed so you can reinvest it in your business — or spend it on something fun!
We only charge 2% (less than most credit card processors!) so it won’t cripple your margins.
Plus we also offer a Payability pre-funded credit card that will give you 2% back. So if you reinvest your entire Payability payout using your Payability virtual credit card, your cash back will cover practically all of your fees.